Introduction
Tesla is a high-tech firm that designs, develops, manufactures, sells, and leases electric cars, energy-generating products, and related services. Tesla Company was founded in 2003 by American entrepreneurs as Tesla Motors and later transformed to Tesla Company when Elon Musk took over as the CEO. Their main goal is to limit fossil fuels and generate less sustainable energy products. This case study attempts to provide a detailed analysis of Tesla Company, focusing on generic strategy, SWOT analysis, and results. The report also examines the firm’s strategy, strategies to realign the firm, and finally, presents a long-term solution to achieving the company’s goals.
External Analysis
PESTEL Analysis
Political Analysis
Tesla would not have attracted as many investors or new customers in a financial crisis. Tesla was saved from bankruptcy by a $465 million low-interest loan from the US Department of Energy (Jenová et al., 2019). Some states also give up to $5,000 in tax breaks. Tesla wants to do away with private dealerships as most automakers run third-party dealerships in various states, like Michigan. However, electric vehicles are not suited for this business model. This type of law may also hurt customers and manufacturers, as some manufacturers may suffer reduced sales, demotivating them to develop high-quality products.
Economic Analysis
Although growth rates in the United States are slow, this has not to halt individuals from purchasing cars on loans through deals such as 0% financing. The catch, which most people are unaware of, is that interest has been factored into the manufacturer’s suggested retail price at the time the car is sold, hence raising the base price but giving the client the impression that they are getting a deal in the long run (Jenová et al., 2019). Since the withdrawal of 2008, new car sales have been increasing rapidly; thence sales have returned to their pre-market collapse levels. Tesla has emerged from the recession with constantly growing stock prices.
Social
The primary role of Tesla is to provide clean, scalable renewable energy and its products. Consequently, most people support the notion of putting their taxes on renewable fuels and products by utilizing sustainable resources such as solar energy and electricity. Desirably, the government provides enterprises substantial loans and incentives, but unfortunately, some fail to materialize into profitable companies. However, many Americans are still upholding the initiatives to develop a sustainable economy as going green is a pretty trendy word these days.
Technological Analysis
Tesla was likewise founded on the technical notion. To help them, the pioneers assembled a team of automotive experts and Silicon Valley natives. Tesla’s Silicon Valley pedigree, according to Cooke (2020), gave them a crucial edge in inventiveness and devotion to R&D. Their improvements in batteries, aerodynamics, and rolling resistance allowed the prototype Roadster 3.0 to achieve a 400-mile range (Cooke, 2020). Usually, scientific variables, especially inventions, greatly influence business success. Therefore, new technologies and scientific discoveries are central to Tesla’s business model. As a consequence, Tesla will be remembered as a pioneer in the vehicle business.
Environmental factors
While driving automobiles without using or burning fuel is admirable, utilizing energy generated by coal plants contradicts the goal. As a result, Tesla is now creating battery packs that will work in combination with solar panels to assist in harnessing the plentiful solar energy, rendering Tesla entirely eco-friendly (Alghalith, 2018). In addition, government and non-governmental organizations sensitize companies to adopt trendy eco-friendly fossil fuels. They argue that they are more economical than non-renewable energy.
Legal Factors
Tesla has the potential to develop its operations internationally without jeopardizing its patent protection. Furthermore, various research has found a possibility to market the firm’s energy solutions and electric cars, depending on the energy usage requirements that customer businesses must adhere to. Moreover, the firm has the potential to develop via direct sales, which are permitted in a majority of states in the United States.
Porter Analysis of Five Forces in Tesla Inc.
New Entrants’ Threats
Newcomers to the Automobile Company enhance new ideas, thus putting pressure on Tesla through reducing pricing approaches, cost reductions, and new value offers for customers. Necessarily, Tesla must overcome these obstacles and erect substantial barriers to maintain its competitive superiority. Nonetheless, Tesla has received low entrants in the market since the entry into the car industry demands high starting capital, which may be limiting to other aspiring entrepreneurs.
Substitutional threat
A substitutional threat in the market as far as Tesla is concerned is minimal, for instance, the electric vehicle market with particular reference to biofuel. The latter has a moderate potential for substitution due to the existence of standard modes of transport such as bicycle trends. On the other hand, the widely sustainable lifestyle market has a low potential for substitution due to the scarcity of available alternatives in providing intelligent energy management services to consumers. Therefore, so far, Tesla has not yet received any substantial replacement threat in the market. However, the further the company progresses, the more difficult it will be since they are more oriented to their consumers.
Supplier Power
Tesla buys raw materials from a wide range of influential vendors, thus reducing Tesla’s market margins. Suppliers with substantial bargaining power in the consumer products industry pressure automakers to raise prices. Increasing supplier bargaining strength has cumulative effects of reducing manufacturers’ profitability (Alghalith, 2018). Panasonic, for example, makes lithium ions, whereas Solar City makes solar panels. As a result, Tesla has merged with vendors like SolarCity to manage costs without exploitation.
Buyer Power
Collaborative activities to decrease prices for Tesla products have a limited probability of occurring since other firms provide limited competition. Nevertheless, in the event of significant defaults, consumers may band together to force Tesla to lower its prices. However, arguments for further price reductions are uncommon due to the aggressive pricing strategy. In addition, delivery processes are lengthy, and deadlines are frequently missed, resulting in clients obtaining a discount.
Government and Law
Electronic safety regulations provide the government with the legal right to postpone supply. Alghalith (2018) assert that government can sue Tesla for AI-related conduct due to ethical concerns with self-driving decision-making. Government financial aid enables public decisions to leverage Tesla’s operations and common incentives. Those who did not meet the statutory requirement could buy ZEV credits from those who did. The rule supported EV manufacturing directly and indirectly by giving EV manufacturers a new revenue stream. These credits were expected to become cheaper as all manufacturers expanded EV sales.
Competitors
Competition is a business problem that can be favorable or detrimental. Rivalry forces a company to prove its worth in a market constantly. Tesla works in a dynamic and competitive market; otherwise, buyers would see the same items with no unique qualities without competition. With hybrid vehicles and appealing Formula 1 trucks, Ford is viewed as Tesla’s biggest adversary in this research. In addition to global network and brand recognition, they have internal assets such as research and development. Nevertheless, a large, devoted client base and excellent products and services have enabled Tesla to outwit Ford in the market.
VIRO Analysis of Tesla Inc.
Valuable
Valuable skills help Tesla capitalize on opportunities and mitigate threats from the macro and microenvironment. These attributes help a company expand, improve, and grow. Tesla has evolved into a highly innovative firm with cutting-edge goods and services. Further, an organization’s marketing strategy is impacted by critical innovation. The new idea improves the company’s process efficiency, reducing production costs and increasing profits. Creating and innovating new thoughts has enabled the company to address environmental challenges and capitalize on eco-friendly environmental opportunities successfully.
Rare
Rare exploited innate qualities contribute to Tesla’s competitive edge. For example, the organization has used thorough problem-solving talents. As a result, Tesla encourages problem-solving among employees and management. Solving challenges allows the business to work collaboratively and peacefully. Staff collaboration increases competitiveness, resulting in a short- and long-term competitive advantage for the business. As a result, the firm has a unique ability to prevent potential hazards and seize opportunities.
Inimitable
Inimitable capabilities contribute to a firm’s competitive benefit and long-term viability. Competing players will find it difficult and costly to replicate these skills and competencies. The quality of the product Tesla offers is high for consumers compared to other firms. The consistent of the products has enhanced repeated purchases, thus increasing the company’s product consumption. Other firms’ inability to provide similar remarkable services has ensured that Tesla maintains its high niche in the market.
Organization
Tesla has developed a unique and non-replaceable organization that other competing firms cannot utilize; as a result, it has ensured the company capitalizes on opportunities hence higher efficient utilization of resources. Furthermore, the organization provides in-house training to employees fostered towards individual job designs and roles. Hence, workers are prepared for a daily work function, professional advancement, and personal growth and development.
Value Chain Analysis
The model excavates the entire range of procurement activities of raw materials to the production, marketing, sales, and after-sale services. In Tesla’s case, inbound logistics has been essential in ensuring the inward flow of goods into the organization since its establishment. Tesla operates sizable warehouses around the United States majority of which are leased facilities. This facility is used for both warehousing and manufacturing purposes.
Functional Analysis
Identifying the challenges and opportunities of each functional unit impacts other functional units and the business as a whole. For example, a functional analysis clarifies Tesla’s functional units. Thus, according to a benchmark of automotive functional units, Tesla’s marketing and manufacturing procedures are in line with industry best practices. Tesla employees, meanwhile, frequently cite severe safety violations and long hours against Elon Musk (Alghalith, 2018). The daily demands of the Tesla Corporation have pushed the CEO and employees to go above and beyond.
SWOT Analysis of Tesla Company
Based on Tesla, it is acknowledgeable from the SWOT analysis that the strengths have overwhelmed the weakness. The robust internal innovation strategy has enabled the company to introduce the first electric car. Therefore, the company has registered massive competitive and profitable products compared to other firms. Moreover, from the analysis, it can be noted that the opportunities have also overcome the threats in that Tesla has been able to expand its business as far as Asia. Hence it has increased the market presence, and as a result, the company has gained significant revenue.
Overall, from the SWOT analysis, it can be summarised that Tesla can be successful for years to come. Nonetheless, as this SWOT analysis shows, the company must overcome many obstacles to maintain its competitiveness and profitability. Tesla’s global presence must grow; for example, opening additional facilities and sales offices in high-potential developing markets may help Tesla realize its mission and vision. The company must also invest much in research and development to produce technologically advanced, competitive items. This SWOT analysis shows that Tesla can compete globally despite intense competition.
The extensive research illustrates that the firm’s strategy has worked, with no misalignments. From a luxury car specialist to a holistic differentiator, Tesla is driving down the market. Supplier relations, automation, and research distinguish Tesla’s goods. Their purchase of SolarCity allowed them to enter new areas, such as eco-friendly solar panels. HR and quality management practices have created a creative, hardworking workplace that promotes market and arena success. Tesla’s ambition to speed up the world’s transition to sustainable energy is supported by strong cash flow and tremendous momentum from economic success.
My company’s action regarding Tesla’s research is to be a high product-oriented company. From the case study, it is evident that Tesla has minimal competition as they produce high-quality products. The electric car produced by Tesla has not been produced elsewhere; this has ensured the ever-increasing number of customers. Large businesses are characterized by robust sales that result in increased profits; therefore, unique products attract consumers, and for my firm, that is the critical action to adopt.
Conclusion
From this case study, it is essential to note that Tesla is the leading producer of fossil-free products, and over the years, they have received any notable competitors. Further, Tesla has adopted a high innovative strategy that has enabled them to produce quality products that satisfy consumers. Lastly, the exercise exacerbates that basic plans must be outlined and firmly adhered to achieve their objectives, and innovation is key to success.
References
Cooke, P. (2020). Silicon Valley imperialists create new model villages as smart cities in their own image. Journal of Open Innovation: Technology, Market, and Complexity, 6(2), 24. Web.
Jenčová, S., Vasanicova, P., & Litavcová, E. (2019). Financial indicators of the company from electrical engineering industry: the case study of Tesla, Inc. Serbian Journal of Management, 14(2), 361-371. Web.
Alghalith, N. (2018). TESLA: INNOVATION WITH INFORMATIONTECHNOLOGY. International Journal of Business Research and Information Technology, 5(1),37. Web.
Appendix A
The case study analyses the generic strategy of the business where it focuses on the environmental analysis of the business and internal analysis of the business. The external analysis discussed the PESTI, Porter’s Five Forces, and competitors. Further, the PESTI analysis talked about political, economic, social, and Technological factors. The factors affected the operations of Tesla negatively and positively. Moreover, the internal analysis discussed includes (Valuable, Inimitable, Rare and Organisation), Value Chain, and Functional. It further analyzed the SWOT of Tesla and how they have impacted the organization. Finally, the paper also analyses the firm’s strategy of Tesla and the important actions of a specific firm concerning Tesla.